Insights from The Lab

RPA in Insurance – Robot Process Automation in Insurance Claims Processing

Article by : The Lab Consulting

Robotics process automation, or RPA, is revolutionizing insurance. It’s drastically changing the way insurers operate; it’s the fastest-moving technology in the field today.

Why? Why is RPA insurance spreading like wildfire? Why is it so popular? One of the reasons is that it can (finally) bridge disparate systems that affect both the customer experience and back-office operations. From personal and commercial insurance line underwriting and onboarding, to policyholder services and claims processing, insurance companies large and small are realizing the benefits of standardized workflows—streamlined with robotics technology.

What is robotic process automation in insurance?

In insurance, RPA is defined as “the use of end-user desktop-based work-task automation software to process insurance transactions.” In plain English, this means “implementing software robots that can be custom configured for each computer without the use of code.” With RPA, you’ll have an AI (artificially intelligent) workforce, a.k.a. robotic assistants, to help you process repetitive insurance work.

Insurance robots operate similarly to Excel macros. But unlike Excel macros, RPA bots can span multiple systems instead of being confined to just one. These robots work at the individual-data-field level across all insurance systems. RPA platforms such as UiPath, Automation Anywhere, and Blue Prism can process actions down to the mouse and keyboard levels. Once they’re set up properly (more on that in a minute), they can do everything from opening applications to clicking, copying, and pasting information from one application to another, sending emails, and similar “low-value-add-yet-annoyingly-labor-intensive” activities.

For established insurance providers, operations have traditionally (and heavily) relied on outdated legacy systems with intricate moving parts—and lots of work done in Excel, manually (by highly-paid knowledge workers), outside of the system to reconcile and transcribe data. Historically, this has resulted in an impassably-high hurdle for streamlining existing technologies, without a wholesale (and costly) reinvention of the entire company’s IT infrastructure.

For newer insurance providers, the bar is lower. They face fewer challenges, given their ability to leverage a largely cloud-based infrastructure from the get-go. Contrast their situation to that of well-established insurance providers, and you can see that it gets expensive to implement core systems that routinely fall short on the promise of automation.

This is why insurance companies—perhaps especially the entrenched ones—are so excited about RPA. It finally lets them use robotics in the insurance industry to “connect the last mile” of their legacy insurance systems in a way that improves the customer experience and back-office efficiency. Little wonder that RPA is changing the way insurance companies conduct business operations.

As you surely know, insurance operations require intricate process and system connections for conducting business across underwriting, managing insurance claims, and analyzing risk. Yet insurance companies using RPA can make these processes more efficient—sometimes by a stunning 50 percent—by reducing mountains of mundane and time-consuming data-entry and transcription tasks across legacy systems.

That’s certainly exciting. But it comes with a caveat. You can’t reap the benefits of robotics process automation in insurance unless you take a deep analytical dive and standardize your processes first.

Top six benefits of RPA in the insurance industry

Once they’re “fed” a “diet” of the right kind of processes, robots can help you link disparate legacy systems to conduct insurance business faster, reduce labor costs, and expedite quoting, underwriting, customer service, and claims processes… all at the same time.

Note our playful use of the terms “food” and “diet.” They’re really not too far off. The only way your insurance company can tap the maximum benefits of RPA in an insurance use-case is by first standardizing all manual work. Deep, front-line process analysis and desk-level work standardization across the entire organization are, simply, essential. They’re what makes RPA in insurance worth the investment.

As we’ve noted, the benefits from RPA in insurance can be both financial and operational, improving back-office processes and the customer experience while saving money on labor. Basically, robotic process automation lets you do more with less.

When compared to more traditional automation, robotic process automation in insurance has specific benefits, including:

  • Labor saving. Insurance robotics can reduce human labor by up to 80 percent. (That’s no typo. Eighty percent.)
  • Consistency. Insurance RPA reduces output variability among information-duplicating tasks, so underwriting during the claims process is free of human errors and missing or incorrect data.
  • Non-invasive improvement. Robotic process automation in insurance doesn’t require any changes to a company’s core IT structure. It simply sits atop/across the current infrastructure without the need for changes or upgrades.
  • Multi-tasking. Robotics in insurance is designed to pull information from multiple systems simultaneously instead of one-at-a-time—a decidedly human limitation.
  • Nonstop performance. Insurance robots work 24/7, 365 days a year. You never have to pay them overtime, provide health insurance (heck, they don’t even get sick), or worry about them leaving the company.
  • Friendliness. Last but certainly not least, robots in insurance can free up an employee’s time that’s traditionally sapped by slow, boring data-entry work. It may come as a surprise to you, but robots can boost human worker morale!

What are RPA insurance use cases?

Robotic process automation in insurance use-cases are documented lists of actions/steps that take place on the computers or other electronic devices of front-line employees that are used to automate information movement across core insurance systems.

That may sound complicated, but it’s not. Simply think of an RPA use-case as a process blueprint. It’s what IT consultants can use to set up automated scripts running across multiple IT systems at once, all processing data at the same time. Pretty powerful stuff.

Six examples of robotic process automation use-cases in insurance and companies using RPA

Given this new frontier—and their legacy ways of doing business—most insurance companies struggle to find places to get started with RPA. Use-cases can help. They’ll give you ideas of where you can install your insurance robots first. Consider these six examples of RPA  insurance use-cases. Let them jump start the ideation for your robotics project:

  • Insurance underwriting RPA use-case example. At one company, underwriting processing time was slashed by 80 percent—thanks to the elimination of manual copying and pasting of client information from inbound customer emails into one cloud-based underwriting system and two on-premises core insurance systems.
  • Insurance quoting RPA use-case example. One insurance company used RPA to turbocharge policy-quoting speed by automatically copying contact data from requests on the company website and validating it on government websites such as DMV and third-party databases like as SambaSafety.
  • P&C insurance claims analytics and reporting RPA use-case example. Another insurer increased the speed of its analytics insights by automatically moving automotive claims transaction volume data into its business-intelligence application… without human wrangling or intervention!
  • Life insurance claims RPA use-case example.  This insurance company slashed the cycle time of life-insurance claims processing by 40 percent. They were able to  automate what had been the manual entry of claims data by letting the bots validate death certificates on government websites.
  • Insurance premium accounting RPA use-case example. Another insurer reduced home-office error correction by 50 percent for payments set up at agencies. How? They were able to automatically copy and move information from the new policy application into the core insurance system, removing manual transcription of data by agencies.
  • Life insurance in-force customer service RPA use-case example. This life-insurance firm reduced the overhead of customer service by 25 percent by automatically transcribing data from emailed policy-change requests into core systems.

An in-depth insurance underwriting RPA use-case

When prospective customers are interested in purchasing an insurance policy, they’ll always request a quote first. This will be based upon information provided by the person to be insured, as well as the specific coverage requests for the policy. Different insurance companies use different programs, and while they all process the work differently, they all do it manually.

Some insurers may pull driving records manually from DMVs. Others might pull the information from databases like SambaSafety. Regardless of where the driving-record data originates, it the must be copied from a PDF, a different database, or an email—and then pasted into an underwriting system like Applied Rater, Oracle Insbridge, or Ratabase that houses all underwriting info for each customer.

But that’s just the beginning! Next, manual spreadsheet or email work almost always has to get processed outside of these systems, regardless of what legacy system is being run. Put it this way: If your company processes 1,000 applications a day, that’s an insane amount of mindless copying and pasting… all being performed by people whose time (and salaries) are worth a lot more than that.

To make matters worse, underwriting is also susceptible to delays and inconsistencies in workflows and communications. This is due to human error, as well as missing or incorrect data in applications. Thankfully, robots in insurance can reduce these errors by automatically linking data fields, even if they span multiple, disparate legacy systems that hardly seem link-able.

Automating all this mundane copying and pasting allows insurance companies that use RPA to conduct business faster, reduce labor costs, and speed up quoting, underwriting, customer service, and claims processing. Here’s the bottom line, quite literally: All that manual underwriting processing can drain up to 80 percent of an employee’s time!

Think about that. And then think about the fact that we haven’t even mentioned the copy-and-paste-intensive process of onboarding a policy once it’s sold!

A detailed RPA in insurance case study: robotic process automation in insurance claims processing

To illustrate robotics in the insurance industry at work for an auto insurance provider, we’re going to walk you through a robotics in insurance claims case study. Let’s call it “A day in the life of Dan, an auto insurance claims processor.”

Today, much of Dan’s work day is spent copying and pasting claims-form data from PDF files into a web-based data-management system. Dan must retrieve the PDF claims file from an email, then copy-and-paste all fields from the PDF into the doc-management system. Once this is done, Dan next must create a new document and import all of the information from an invoice into it—and then attach it to the management system. Finally, Dan sends this to management for approval.

Not too bad, right? Dan is a good employee who does good work. But, with a robot at his side, Dan can be better. Much better.

Dan’s work life could be easier with an RPA in insurance use case.

Let’s replay the scene, but with the UiPath RPA installed. Now, the RPA software can log into Dan’s email app and retrieve the PDF claims form. The bot navigates through different screens and actually controls Dan’s mouse and keyboard to copy-and-paste all of the individual fields of data from the PDF file into the doc-management system.

In this robotic process automation in insurance case study, the RPA insurance software then creates a new Word document, copies the information from an invoice, pastes it onto the new document, and attaches it to the document-management system. The insurance robot then sends the claim to the back office for approval. Just like that, Dan is now able to focus on more important jobs around the office without the backlog of mundane tasks that drain his time and energy.

Consider the before-and-after: Dan used to spend 15 minutes per claim on the above tasks. Now, with his robot running all the data-transcribing work, it only takes him four minutes per claim. Just imagine the benefits of this robotic process automation in insurance use-case, once rolled out at large scale across the organization!

Robotic process automation in insurance claims: Standardize that work before you throw a robot at it!

RPA insurance accomplishes a ton. Properly set up, it:

  • Mitigates risk
  • Improves accounting tasks
  • Reduces manual work when sending invoices
  • Automatically applies payments to the right general ledger
  • Schedules appointments of inbound leads automatically
  • Communicates with customers asking similar questions
  • Reduces the manual effort of moving data around when processing claims

While implementing RPA insurance claims processes may seem highly technical and difficult, it doesn’t have to be.

Ultimately, the right approach to standardizing work will help you immensely. Here, we’re going to review the five basic steps for conducting a simple RPA in insurance claims improvement analysis and implementation process. This will help you introduce RPA for all major processes without breaking the bank or exhausting programmer/developer manpower.  

Step 1: Scope the RPA in insurance implementation project

The most effective way to start an RPA insurance project is to first determine a manageable scope. Start small, then roll out at scale. Don’t swing for the fences with an enterprise-wide scope before piloting a test across a single business unit. No matter what anyone else says, starting huge with RPA never works.

Common divisions in insurance companies include: Agency Operations, Underwriting, New Business Processing, Policyholder Services, and Claims. We always suggest picking one division as your starting point: Claims. We love working in Claims because you can reduce overhead costs and reduce claims severity at the same time.

Claims departments are rife with customer interactions, manual work, and usually revolve around anywhere from four to seven different systems that claims reps must toggle through as they move data every day. To begin, determine a group of 100 to 500 employees whom you know will be open to change. Start your mapping exercise with them.

In this RPA insurance use cases example, we see that identifying a very specific area suitable for RPA is key in the scoping process.

A key part of building an insurance RPA scope is identifying which areas in your company are good candidates for RPA. Here’s a good example, above.

Remember, starting with too big of a scope will almost certainly set you up for quick failure. Start small. See how the organization responds. Learn your lessons about the cultural response to insurance RPA. Then scale up.

Step 2: Determine baseline insurance operations cost to calculate total benefits realized from RPA in insurance implementation

Before you can even attempt to measure the benefits and total cost-effectiveness of robotic process automation in insurance, an accurate baseline of current-operations costs must be created and analyzed. When creating a baseline, you’ll have to work with the HR department to determine the cost of each fully-loaded employee in scope. This will take a week or two by itself to get locked in, so make sure you allocate enough time to get the scope cost clear.

Showing the ways in which insurance companies using RPA can benefit financially is the easiest way to get the implementation green-light you need from shareholders and the C-suite. Technology might advance and robots might be here to stay, but money always talks.

Step 3: Analyze the current state of company processes to document opportunities for robotic process automation in insurance

Now it’s time to get your hands dirty—very dirty. This is the step where you get to do a lot of process mapping of the systems and people that you’re considering for RPA. Grab your favorite tool for note-taking, and get ready to observe an employee of the back office of the insurance company for an entire day. Note every step that must be done for the systems you want to use RPA on. Document every detail, down to the keystroke and mouse-click levels. There are likely a ton of repetitive actions made throughout the day.

Once you have finished that on Employee One, do it again on a different day with Employee Two. Make sure you get a large enough sample size of observations to validate your findings.

By analyzing as many employees as possible, insurance companies using RPA can find the best areas in their processes for automation.

Above, you can see the result of our analysis of a top company’s employee activities to determine the best targets for RPA insurance implementation.

We recommend using screen-sharing software such as GoToMeeting or Webex to capture a “day-in-the-life” scenario. It’s best to follow several workers over a week or two to get a more accurate sample size for estimating the RPA opportunities in the entire scope.

In this snapshot from UiPath, we see that each sub-process automated through insurance RPA is made up of Activities that can be tracked at the keystroke level.

As you can see above, every surface-level aspect of RPA insurance software has to be supported by very specific details at a keystroke level for true automation.

Step 4: Standardize workflow and procedures before or during RPA in insurance implementation—but not after

Don’t even think about RPA in insurance claims if you aren’t ready to analyze and standardize manual processes first. This is the vital “brain food” that RPA bots require in order to do their jobs.

As we’d mentioned earlier, insurance processes vary greatly across different companies. But they also vary internally just as much. Employee A almost never processes work in the same order as Employee B. The key to insurance companies using RPA successfully is standardizing everyone’s work processing similarly, so it can be rolled out to everyone the exact same way.

Project managers with lean and Six Sigma experience are the best candidates for creating RPA insurance use cases, based on their previous work experience with standardization of processes at scale.  

Step 5: Hire an RPA consultant or vendor to implement insurance claims RPA —or do it yourself

RPA is easiest when you hire a vendor to show your insurance company the areas that RPA can improve upon. They can help you map flow charts and plan process standardization business cases—and they can then install the actual RPA in claims processing technology to put said plans into action. The cost of RPA analysis varies greatly by consulting firm, and big names will charge you millions. There are also smaller specialty shops that will gladly look at smaller groups for much less. Contact us if you want to implement insurance RPA with less cost and risk.

Feeling in a DIY mood? There are options for those who wish to take on RPA implementation with their own two hands. The Community Version of UiPath is free, and RPA certification courses can be completed in one month online. But if you have a large-scale project and you’re the one in charge, you’ll need Six Sigma training.

Benefits of choosing The Lab for RPA insurance analysis, use-case development, and implementation

So, you’ve looked at your choices and have a solid plan for implementing RPA. Now what?

If your decision is “Hire someone to help,” we’re pleased to present a variety of solutions for robotics in insurance industry. Interested in using the power of RPA for your insurance company? Feel free to get in touch with us to learn more.